U.S. livestock: Hogs pare gains as Trump plans order to keep meat plants open

Cattle up with wholesale beef prices

CME June 2020 lean hogs with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. lean hog futures hit a four-week peak on Tuesday on worries about tightening pork supplies as the coronavirus shutters meat processing plants, but the market pared gains on news that U.S. President Donald Trump plans to order such sites to stay open.

June lean hog futures on the Chicago Mercantile Exchange settled up 0.925 cent at 56.2 cents/lb., after rising as high as 60.775 cents, the contract’s highest since March 31 (all figures US$).

Trump is expected to sign an executive order later on Tuesday using the Defense Production Act to mandate that the meat plants continue to function to protect the country’s food supply, a senior administration official said.

The world’s biggest meat companies — including Smithfield Foods, Cargill, JBS USA and Tyson Foods — have halted operations at about 20 slaughterhouses and processing plants in North America since April as workers fall ill.

“It’s a step in the right direction, because in a roundabout way, what (Trump) is saying is, we have to find more labour to get inside these plants,” said Dennis Smith, a commodity broker for Archer Financial Services in Chicago.

However, Smith said, he was unsure how the order would be enforced in the short term.

The largest U.S. meatpacking union said the Trump administration should immediately compel meat companies to provide protective equipment to slaughterhouse workers and ensure daily coronavirus testing.

The plant closings have slowed the U.S. hog slaughter significantly. The U.S. Department of Agriculture reported Tuesday’s hog kill at 283,000 head, down from 354,000 head a week ago and 471,000 a year ago.

“This production drop is now entering its fifth week… I think there is going to be a real (meat) shortage like Americans have never experienced before, that will last four weeks or so,” Smith said.

Others attributed Tuesday’s pullback in CME hog futures to a technical retracement after a two-week run-up, and worries about excessive hog supplies.

“There still is the fear that we are backing hogs out in the country,” said Don Roose, president of Iowa-based U.S. Commodities.

CME live cattle futures firmed on rising wholesale beef prices as the beef sector faces supply struggles similar to those in the hog industry. The pace of the U.S. cattle slaughter is declining, limiting beef supplies as the summer grilling season approaches, Roose said.

CME June live cattle settled up 0.65 cent at 84.7 cents/lb. August feeder cattle futures rose 0.65 cent to finish at 127.925 cents/lb.

— Reporting for Reuters by Julie Ingwersen in Chicago.

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